Aiea was originally the name of an ahupuaʻa, or Hawaiian land division. It stretched from ʻAiea Bay (part of Pearl Harbor) into the mountains to the north. At the end of the 19th century, a sugar cane plantation was opened in the district by the Honolulu Plantation Company.

As ʻAiea has several miles of shoreline on Pearl Harbor, the focus of the 7 December 1941 attack by the Japanese on military installations there greatly impacted the town. For example, one damaged ship, the USS Vestal, beached at ʻAiea Bay to prevent sinking. Many photographers photographed the battle from the hills in ʻAiea.

After World War II the plantation shut down and the mill was converted into a sugar refinery. Meanwhile, developers started extending the town into the surrounding former sugar cane fields. In the years since then, ʻAiea has grown into an important suburb of Honolulu. The town's sugar history came to a close in 1996, when C&H Sugar closed the refinery. Then in 1998, the 99-year old sugar mill was torn down by the owners, amid protests from town residents and the County government.

Aiea is the home of Pearlridge, Hawaiʻi's largest enclosed shopping center and second largest shopping center in the state. The mall is separated into two sections, known as Uptown and Downtown, includes the only monorail in Hawaiʻi, the only hospital located on mall property (Kapiʻolani Medical Center at Pali Momi), and Hawaiʻi's largest watercress farm (Sumida Farm).

Aiea is also home to Aloha Stadium, home of the University of Hawaiʻi Warriors football team, and the host site for the Hawaiʻi Bowl every December and the National Football League's Pro Bowl every February.

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